'Fiscal cliff' hangs over election, but not as issue

Monday

WASHINGTON - It took exactly three presidential debates before either Mitt Romney or Barack Obama addressed what many economists say is the most-pressing issue that the federal government faces.

WASHINGTON - It took exactly three presidential debates before either Mitt Romney or Barack Obama addressed what many economists say is the most-pressing issue that the federal government faces.

And even then, they talked only about part of the problem.

In January, the George W. Bush-era 2001 and 2003 income and investment tax cuts are scheduled to expire. At the same time, $109 billion in discretionary spending cuts - half to the Defense Department - are set to go into effect, part of a scheduled $1.2 trillion reduction over 10 years.

Economists call the combination "the fiscal cliff" and say the effect would be sweeping and dramatic. One economist from George Mason University predicted that it would cost the country 2.14 million jobs in a very short period of time.

In a way, it's more Obama's problem than Romney's.

The next president won't be inaugurated until Jan. 20, and regardless of who wins on Nov. 6, Obama will still be in office on Jan. 1.

He's said he will not sign any bill extending tax cuts for the rich but has signaled he wants to extend the tax cuts for families earning $250,000 or less. As for the spending cuts - called "sequestration" in government-speak - he made his intentions clear during the third debate.

"It will not happen," he said.

Romney, meanwhile, said the effects of the mandatory cuts to the nation's military would be "unacceptable to me." He's also assailed Obama for agreeing to budget cuts. As for the taxes, he's signaled that, if he were elected, he'd support extending them for all income groups and could sign a bill retroactive to Jan. 1 if necessary.

Meanwhile, both the end of the tax cuts and the start of the spending cuts remain on the books, unless Congress acts. After the election, Congress will have less than a month to resolve these issues or face what the Congressional Budget Office and countless economists have predicted would be a "double-dip recession."

"This is really like children playing with nitroglycerin, saying, 'It hasn't gone off yet,'??" said Steve Bell, a Republican former staff director for the Senate Budget Committee. "It's astonishing to me."

Bell, who now is a senior policy director at the Bipartisan Policy Center, said both Obama and Congress deserve equal shares of blame. He said letting the nation go over the fiscal cliff "is a form of insanity."

He said the uncertainty alone about the issue already has curbed the nation's gross domestic product by about a half a percentage point. Companies aren't expanding because of the uncertainty.

"It is the most-consequential decision we have to make, and nobody is talking about it," Bell said.

But it's a top issue for Terry Nelson of Bloomington, Ind. He drove from Indiana to Cincinnati to see Romney last week. One of the main reasons he did: his worries about the fiscal cliff.

Nelson, a contractor, was unemployed for about a year. He worries that, if the country goes over the cliff, he'll be in the same situation. He thinks Romney is more likely to address it. "I don't want to go through that again," Nelson said.

Others say the issue isn't on their radar screens.

"People don't understand it," said Anne Petersen of West Chester.

"Unfortunately, I believe people are numb to it because it's not near yet," said Steve Sinnott of Liberty Township, who said he's personally concerned about the issue.

Former Ohio Sen. George V. Voinovich, a Republican, said no plan will truly succeed unless it both avoids the cliff and doesn't put off the problem. He said the candidates have failed to appropriately prioritize the issue.

"I think they owe it to the American people to tell us what their plans are," Voinovich said. "They've got to acknowledge that this is a serious threat to the well-being and security of the United States. It's urgent that we do something about it."

Mark Goldwein, senior policy director for the Committee for a Responsible Federal Budget, is one of the few who remains optimistic. He said there's too much at stake for lawmakers not to act.

"Now there are real consequences to inaction," he said. "The politics of going off the cliff and the politics of just punting are bad, too."

He's hopeful that the across-the-board cuts will be replaced with more-incremental changes that reduce spending as well as a plan to address the costs of entitlements and tax reform.

"If we do nothing, or all we do is punt, there will be both economic and political consequences," he said.

jwehrman@dispatch.com

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